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23 January 2011

This was Mr. Justice Henderson's judgment in the trial of an action between two Gibraltar based online gambling concerns. The claimant in 32Red Plc v WHG (International) Ltd and others [2011] EWHC 62 (Ch) (21 Jan 2011) had sued for infringement of Community trade mark 2814424 and British trade mark 2509861. The defendants had counterclaimed for invalidation of those registrations. The signs to which the claimants objected were the words "32vegas.com", "32vegas" and "32v" and three devices incorporating the numeral 32.

In a rather long judgment, His Lordship identified the following issues and considered them in the following order:

"93. The goods and services covered by the Vegas signs are identical, or at any rate virtually identical, to those covered by the Community marks: in each case, the goods and services are those provided by an online casino, and the signs or marks are used to brand the casino. This is an important initial point, because in such circumstances a lesser degree of similarity between the marks may suffice to establish a likelihood of confusion (proposition (g) in the Trade Marks Registry summary).

94. That the Vegas signs are similar to the Community marks is in my judgment undeniable. In both their written and their graphic forms, there is an initial figure 32 followed by a single word (or in the case of the 32v signs, followed by a single letter which in its context plainly alludes to the word "vegas"). The figure 32 does not of itself denote anything to do with online gaming: it is just a number, and not even a number with obviously lucky (or unlucky) connotations, such as 7 or 13. Furthermore, the single word "vegas", like the colour "red", is agreed to have a gaming association. Thus the use by William Hill Online in 2009 of the inherently specific number 32 in conjunction with the single word "vegas", to identify and brand an online casino, clearly satisfied the test of similarity. The critical question, therefore, is whether the similarity was such as to give rise, in all the circumstances, to a likelihood of confusion on the part of the public, including a likelihood of association in the sense of engendering the mistaken belief that the two casinos were operated by the same or economically-linked entities.

95. In answering this question I must look at the matter through the eyes of the average consumer of online gaming services, whom it is convenient to call an "online gambler" for short, while remembering that for many customers the activity is essentially a recreational one, and not all customers play for real money. I must also make due allowance for the fact that the average online gambler will rarely have had the opportunity to make direct comparison between the Community marks and the Vegas signs, and will have had to rely on the imperfect picture of them retained in his mind. It is material to note in this context that the online gambling market is a crowded and volatile one, with a large number of brands competing for customers' attention, and generally very low levels of customer loyalty and retention.

96. I think it is also relevant to have in mind the difference between the marketing models of 32Red and 32Vegas. By January 2009 32Red was a strong brand with an excellent reputation, and from its inception in 2002 it had been promoted alone, not as part of a family of brands in common ownership. By contrast, 32Vegas had always been marketed on the "carousel" model, and as Mr Cole-Johnson frankly acknowledged the reputation of individual casinos was never of any particular importance to William Hill Online, any more (I infer) than it had previously been to Crown Solutions. In these circumstances it seems to me reasonable to conclude that the Community marks are likely to have made a rather stronger and more positive impression on members of the online gambling community than the Vegas signs.

97. The next point I would make is that the Community marks are, and were in 2009, highly distinctive in character. The distinctiveness lay in the combination of the specific number 32 (which in itself has no obvious gambling connotation) with the word or the colour red, which is agreed to have a general gambling connotation. Some, but by no means all, online gamblers will also have picked up the specific allusion to roulette, and will have recognised the marks as making a verbal or visual reference to the result that a croupier would be likely to call out when the ball lands in the 32 slot. This allusion, I would stress, is not directly descriptive of the game of roulette, or of any particular feature of the game; but, for those who recognise it, the allusion gives a much stronger and more specific gaming flavour to the Community marks than the mere use of the word or colour red could do by itself. In a similar way, the red colouring of the script and of the circle in the graphic Community mark reinforces the effect of the word "red", but those who recognise the allusion to roulette may also see the circle as a stylised representation of a roulette ball.

98. I now turn to the Vegas signs. The three text signs all begin, like 32Red, with the figure 32. In two cases this is then followed by the word "vegas" which, because of the obvious allusion to Las Vegas, has a strong (but still general) gambling connotation. In the third case, the single letter "v" will, as I have already said, naturally be read as an abbreviation of "vegas". There is no allusion to roulette or to any other specific game offered by an online casino, and the number 32 has no connection of any kind with Las Vegas. Read or recalled as a whole, the text signs are in my view devoid of any descriptive character beyond the generalised reference to gambling inherent in the word "vegas". The main visual sign is reminiscent of a neon casino sign, and the gaming message is reinforced by the red and gold colouring and the star. The two smaller visual signs focus on the gold 32 and star with the interlocking white "V", and in one case the red background is also similar to that of the main sign; in the other case the background is black, another colour with a generalised gaming connotation (for example the suits of playing cards are either black or red).

99. As a matter of overall impression, the dominant feature of all the Vegas signs is in my view the figure 32. It comes first, whether one is examining the verbal, visual or aural impact of the signs, and in the graphic signs the 32 is notably larger and more brightly coloured than the white "Vegas" or "V". An online gambler would naturally gain the impression, perhaps at a subliminal level, that the "Vegas" component of the signs is in some way subordinate in impact and importance to the "32", although he would also recognise that the "Vegas" is connected with and part of the "32" (a connection visually reinforced by the interlocking of the "2" and the "V").

100. Was there, then, a likelihood of confusion on the part of the average online gambler in 2009 between the Vegas signs and the Community marks? In my judgment there was. It is simplest to begin with the online gambler who did not pick up any allusion to roulette in the Community marks. For such a person, the overall impression created by the Community marks and the Vegas signs would have been very similar: in each case the name of the casino consists of the same number (32) in the dominant position (verbally, visually and aurally), followed by a single word with a general gaming flavour. A natural conclusion to draw would have been that the two casinos were under common ownership or economic control. In addition, the likelihood of an association between the two casinos might well have been reinforced, consciously or unconsciously, by the red background to two of the three graphic Vegas signs, including the main sign where the figure 32 is prominently displayed in gold against a bright red background. The combination of the figure 32 and the colour red could hardly be more striking, and in view of the established reputation of 32Red in 2009 the link to 32Red would have been an obvious and easy one for many online gamblers to make. In a world where stables of thematically-linked online casinos were familiar, there would have been nothing surprising in a burgeoning family of "32" casinos. What would have been surprising, given the highly specific nature of the number 32 and its lack of any intrinsic gambling association, is for two unconnected casino operators to have hit on two such similar names independently.

101. I must now consider those online gamblers, perhaps the majority, who would have picked up an allusion to roulette in the Community marks. For them, the 32Red name and brand will have had a special extra significance, and they may have agreed in substance with Mr Bailey's perception that the name "seemed a clever play on words … it was a breath of fresh air" (paragraph 138 of his report), even if they would not have expressed themselves in quite such enthusiastic terms. But, to return to a point which I have already made, the allusion does not turn the marks into purely, or even partly, descriptive ones. It just gives an added layer of reference, and increases the distinctiveness and memorability of the marks, for those who pick it up. It does not alter the basic form and structure of the marks in any way, nor in my view does it detract significantly from the features discussed above which give rise to a likelihood of confusion with the Vegas signs. The position is, rather, that online gamblers who were alive to the allusion might also have supposed there to be an association between 32Red and another casino which called itself (say) 8Black or 28Even."

For those reasons he concluded that 32Red's infringement claim under Article 9(1)(b) succeeded in relation to all of the signs. He reached this conclusion without needing to rely on any evidence of actual confusion, even though a certain amount of evidence to that effect had been tendered by the claimant. His lordship observed that "the test laid down by Article 9 (1) (b) does not require evidence of actual confusion, and if such evidence is available it is likely to be of a confirmatory nature rather than an essential ingredient of the value judgment that, in the words of Jacob LJ in the Reed case, the court has to draw from all the circumstances."

If anybody wants to discuss this case or trade marks law in general he or she is very welcome to telephone me or contact me through my online form.

PS. The defendants appealed and the claimant cross-appealed against Mr Justice Henderson's decision. The appeal came on before the Court of Appeal on 24 Jan 2012 (see 32Red Plc v WHG (International) Ltd and Others [2012] EWCA Civ 19 (24 Jan 2012). I have written a short case note on the appeal as it contains some interesting analysis on distinctiveness and infringement.

The litigation concerned two patents which the trial judge described as follows:

"The two patents relate to cellular mobile phone technology. Broadly speaking, the first of the patents, European Patent (UK) No. 540 808 ("808"), is concerned with the way in which the mobile phone synchronises itself with the transmissions it receives from the base station. The second of the patents, European Patent (UK) No. 1 186 189 ("189"), is concerned with management of the right of the mobile phone to connect to the network."

In the appeal, Lord Justice Jacob referred to 808 as the "synch patent" and 189 as the "access rights patent". The owner of those patents, IPCom GmbH & Co ("IPCom") was described by his lordship as a "non-practising entity" - that is to say, "a patentee with no business of its own in products covered by the patents" or what some people call a "patent troll". IPCom had bought those patents as part of the patent portfolio of Robert Bosch GmbH. It threatened mobile telephone manufacturers including Nokia with infringement proceedings unless they paid what was believed to be a €12 billion ransom. When Nokia refused IPCom launched proceedings in Germany. Nokia retaliated with revocation applications here as well as in Germany.

In the main judgment Mr. Justice Floyd had held the patents to be invalid. However, he was of opinion that had they been valid they would have been infringed. The patentee challenged the revocation of the synch patent but not the revocation of the access rights grant. In the amendment proceedings the patentee sought to "limit", that is to say amend, both patents. The judge refused both applications - the first on the ground that the application had been made just before trial thereby raising a whole new set of issues and the second on the ground that it would have necessitated a new trial on issues that should have been determined in the main proceedings. Thus, the issues before the Court of Appeal were:

whether the judge was right to revoke the patents;

whether the patents would have been infringed; and

whether the judge had been right to refuse limitation of the patents.

Their lordships heard the appeal on invalidity first and upheld the judgment of the court below. Having found the patents to be invalid it was unnecessary for the Court to reconsider whether the patents had been infringed. The Court also upheld the judge's refusal to amend the patents.

Only two points of law arise from this appeal. The first was whether Nokia should have brought these proceedings in England at all as there were similar proceedings between the same parties in Germany and for a time Italy. The second was whether the judge had been right to apply the decision of the Court of Appeal in Nikken Kosakusho Works and Another v Pioneer Trading Company and Another [2006] FSR 4, [2005] EWCA Civ 906

As to the choice of forum point, IPCom complained as follows:

"IPCom believes that Nokia has sought to involve IPCom in litigation at maximum cost in the UK instead of co-operating to resolve matters in a single jurisdiction."

"It of course may sometimes make commercial sense to agree to resolve matters in a single jurisdiction. But for one party to choose its jurisdiction first and then expect the other to agree it is another matter. It is rather like one football team challenging another after it has picked a home advantage, if not quite challenging someone to a duel but only after having made one's choice of weapons."

On the amendment point, IPCom had attacked Nikken on the grounds of inconsistency with Henderson v Henderson 3 Hare 100, incompatibility with art 138 of the European Patent Convention and non-compliance with the Enforcement Directive. Lord Justice Jacob was not impressed. In his view what IPCom sought to do here was quite contrary to a trend throughout Europe that a patentee should present its whole case at a single hearing. In his view, a limitation that would leave open the possibility of a second trial on validity would be an abuse of process.

12 January 2011

I should first like to wish my readers a happy New Year. Good riddance to the old one which was awful. After the emergency budget in June virtually every SME in England seemed to go to earth. The explanation is not hard to fathom. Litigation is funded largely on tick. So, too, is new product design and development. With the banks rebuilding their balance sheets and making only the payments that they really have to make, such as bonuses to their executives and traders, frivolous matters such as branding and innovation just have to wait.

A sign of the times is that Judge Birss's spanking new intellectual property court is posting reports of decisions on paper like the Media CAT cases or case management conferences such as Westwood v Knight. The first case of 2011 is much more exciting. A summary judgment application would you believe.

In Fitco Inc. v Haugh[2011] EWPCC 1 (6 Jan 2011) a former director of a company that had made its peace with the claimants, was sued for joint tortfeasance in a common design. The alleged wrongdoing was breach of contract and passing off. Essentially, it was said that the defendant's company had distributed in the UK under the AIR SCIENCE sign fume cupboards that it had purchased from the claimants. AIR SCIENCE was the trade mark of at least one of the claimants in the USA. They claimed to be entitled to that mark in the UK even though the sign, UK AIR SCIENCE, had been registered by the defendant's company.

If there had been a distribution agreement between the defendant's company and the claimants it was never put in writing. The defendant's case was that that there had never any contract all and that the AIR SCIENCE sign was associated by customers and the trade with fume cupboards distributed by the defendant's company as opposed t0 fume cupboards supplied by the claimants. Eventually the parties fell out. The defendant and his company sourced fume cupboards elsewhere while continuing to supply them under the AIR SCIENCE brand.

After the exchange of witness statements the evidence against the defendant and his company seemed rather thing. It consisted of a witness statement by one director and a witness summary on behalf of another. The defendant applied for summary judgment on the ground that there was no realistic prospect of success. The hearing of the application came on before Judge Birss on 20 Dec 2010, two months before the trial of the action.

In his skeleton, the defendant's counsel, Andrew Norris, argued that the claim against his client should be dismissed altogether. His opponent, Anna Edwards-Stuart, described that submission as "application creep", a delightful phrase that I shall try to remember. She protested that it had taken her by surprise and the judge agreed with her.

The correct approach on applications by defendants is, in my judgment, as follows:

i) The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman[2001] 1 All ER 91

ii) A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel[2003] EWCA Civ 472 at [8]

iii) In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman

iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]

v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5)[2001] EWCA Civ 550;

vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63

vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725."

When he made his Part 24 application the defendant could justifiably claim that the evidence against him was waif-like as it consisted of a witness summary from one Andre Chambre who resided in the USA and could therefore not be compelled to give evidence. It put on muscle when the defendant's summary judgment application was answered by a witness statement from Mr. Chambre who made clear that he would be in court to give evidence at the trial. As the judge observed:

"It is fair to say that the evidence from the claimants' side is terse but the test for summary judgment is an absence of reality. I do not find that in this case. There is a clear conflict of evidence between Andre Chambre and John Haugh about what was or was not agreed in 2004 but there also some common ground. These are issues to be explored at a trial, not ones to resolve on paper."

In dismissing the application the judge made the point that there was a severe risk that the costs of an action relating to a claim for passing that lasted no more than 6 weeks would dwarf the value of the claim. He advised the parties to "consider carefully whether a form of alternative dispute resolution might be a preferable way of bringing this dispute to an end." The action, or at least the solicitors, come from the North West and we have excellent specialist low cost mediation and arbitration services for the resolution of IP disputes in the North of England.

I was recently contacted by the defendant in this action who told me that all claims against him were withdrawn shortly before trial.

If anyone wants to discuss any of the issues discussed in this case note they should call me on 0800 862 0055 or use the contact form.